Question Intel Q2: 7 nm in bad shape

[jpiniero]

Investor Relations

Intel (Nasdaq: INTC) is an industry leader, creating world-changing technology that enables global progress and enriches lives. Inspired by Moore’s Law, we continuously work to advance the design and manufacturing of semiconductors to help…

www.intc.com

Here's the money shot:

The company's 7nm-based CPU product timing is shifting approximately six months relative to prior expectations.
The primary driver is the yield of Intel's 7nm process, which based on recent data, is now trending approximately
twelve months behind the company's internal target.

Data Center volume up 29% (plus 5% ASP)
Notebook up 9%
Desktop down 14% - not as bad as I had thought

Q3 guidance bad - revenue of 18.2b vs 19.2b in 2019

 

[A///]

The Warhol leak looked like misdirection. XT wasn't exactly a refresh. A reissuing of Zen 2, yes. I can't see AMD making that same mistake again. I never understood why people placed so much faith in leaked roadmaps. They're very easy to fake in Adobe Illustrator. I've often wondered if AMD leaks fake slides just to mess with supposed leak websites they don't like who further dig themselves into a hole. Also the misdirection messes with Intel.

I remember it working when he posted thst. Bur yesh, requires an update

Blogs

I believe it's this link? Intel must have shuffled around links or domains in recent weeks. 🤡

 

[beginner99]

Yes, and anyone still wondering why Apple is going their own way on the Mac instead of sticking with Intel should consider that based on what happened with them at 10nm this may be only the first of several 7nm delays.

But the could have also just gone with AMD. So there is more to it than intels performance problems. I suspect since AMD is usually also behind Apple process with it will start to look award if your "high-end" products use in some way "old" tech. No to mention the actual performance differences.

And I agree, this 6 months delay will become another 6 months delay just like with 10nm. I mean 10nm clearly still had serious yield problems (or some other major issues) or else it's not really explainable that icelake server is still not available. And when it will be, it will face-off vs Milan. Gosh when milan releases Intel will be slaughter on pure numbers in the server space. On actual sales, well I have first hand experience how stupid IT departments can be.

Remember this article? 3 months, that's all it took.

https://seekingalpha.com/article/43...ng-company-losing-process-leadership-to-intel

Well the article is true in that we shouldn't get too hung up about process names. Intels 10nm is more like TSMC 7nm and TSMC 5nm is more like intel 7nm. So actually comparing on process name can be misleading by itself.

But yeah, Intel certainly isn't ahead.

It doesn't matter
but BK isn't happening for a long time and 7nm can't be his doing or yes?

Of course it's probably still his doing. Such projects takes years from start to end. And even if he wasn't there anymore when 7nm started, all the talent that left and stupid bureaucratic process and power games implemented all will impact a research department for years if not decade(s). See some problems can only be solved by a few very intelligent engineers. No project management or group effort can change that. If you alienate these important people and implement stupid business processes you get what you have at intel now.

 

[name99]

As a non industry type, can someone help me to understand this. Are Intel's process node problems due to lack of funding or proper investment in updating their fabs? I just don't see how this problem can persist for so long. Or is it really that difficult to fabricate CPUs on smaller nodes? How is it that TSMC can keep up with manufacturing demands while Intel keeps falling behind for years now at this point?

It's shocking and dismaying that they are now having problems with 7nm

Why is this so hard to understand? It's the story of American business.
Here's how American businesses have run since about WW2:
- business is founded by an engineer, takes risks, does great things.

- founder dies, second gen manager is adequate but feels insecure as both an engineer and on the finance side

- third gen manager takes over. 3rd gen manager is an MBA finance type. Thinks what the engineers do is trivial. Thinks R&D is a cost center that needs to be controlled. Thinks the world doesn't change, and that reality is whatever you want it to be. Company goes off the rails.

IBM. Boeing. Microsoft. Xerox. Now Intel. Same pattern.
It's not absolutely inevitable. Sometimes you get a new manager who appreciates that technology doesn't just happen -- Microsoft under Satya. New AMD. But it is the most common pattern.

As always, Steve understood this years ago:

Before you get angry with my analysis, ask yourself why exactly DID 10nm go of the rails. Why, specifically, was it not based on EUV? Because EUV was expected to cost too much.
And there you have the finance mindset in its full glory. Prioritize cost over everything. Ignore risk. Ignore the benefits of starting a new tech early (learning, first access to those ASML machines). Ignore that competitors will not stand still. Ignore that new tech means new markets opening up.
(eg, where are Intels' MobileEye and Habana going to be fabbed? Chip types that weren't even dreamed up back when the initial 10nm decisions were made, because the people making those decisions were not engineers, and did not consider it important to understand that new technologies open up new market possibilities.)

 

[Doug S]

You guys are all missing that TSMC was behind Intel for so many years not due to lack of expertise (necessarily, it can't be proven either way) but because they didn't have the customer base necessary to try to keep up. You can't buy the new equipment needed for a smaller process only to have it sit around mostly unused the first year or two - it needs to be fully utilized or its cost cannot possibly be justified. That means you need customers who you know will buy sufficient quantities of your leading edge process, and will be around for the long haul. You can't make these sorts of investments if there's a chance they'll switch a different foundry over saving a few bucks, or their business may dry up, etc.

GPUs and AMD (once freed from the clutches of GF) didn't have enough volume (because Intel's integrated GPUs ate more and more of the GPU market share so TSMC knew the market for discrete GPUs would continue to shrink) and not reliable enough (because AMD was never far from insolvency until a few years ago) for TSMC to make the kind of investments necessary.

It wasn't until the smartphone market started driving volumes of hundreds of millions in the early part of this decade that TSMC could count on a sufficient quantity of leading edge demand. It was obvious that market would continue to grow and not be disrupted in the foreseeable future. It had also become obvious by that point Intel would not participate in that market in any meaningful way so this was finally the volume play for leading edge processes foundries like TSMC had been hoping for. It also helped that using GPUs for compute became a thing around the same time, giving a boost to the otherwise declining discrete GPU market.

Couple that with Apple having reason to not want Samsung to fab their chips and Intel apparently being unwilling/unable to do so, and TSMC got the major anchor customer they've always wanted, and even better one willing to prepay for first access to leading edge capacity. That gave them the final piece they needed to become the process leader they are now.

 

[Markfw]

Investor Relations

Intel (Nasdaq: INTC) is an industry leader, creating world-changing technology that enables global progress and enriches lives. Inspired by Moore’s Law, we continuously work to advance the design and manufacturing of semiconductors to help…

www.intc.com

Still reading, but here's the money shot:

Coming from Intel itself, I certainly believe this. What I am sick of, is the Intel advocates that keep telling us "oh, its coming sooner than expected" and "its got a fine yield, doing great".

Positive thinking is one thing, but right out lying or greatly exaggerating is another.

While I don't want Intel to fail as a company (as I am sure they will not) I am ready for competition to get some market share for a long term battle that will continue. Its healthy and good for the consumer.

 

[LightningZ71]

Who would make up the difference for desktop volume? AMD still has nowhere near enough capacity to make a bigger impact, unless they develop competing products for older nodes.

 

[JasonLD]

Intel is accelerating its transition to 10nm products this year with increasing volumes and strong demand for an expanding line up. This includes a growing portfolio of 10nm-based Intel Core processors with “Tiger Lake” launching soon, and the first 10nm-based server CPU “Ice Lake,” which remains planned for the end of this year. In the second half of 2021, Intel expects to deliver a new line of client CPU’s (code-named “Alder Lake”), which will include its first 10nm-based desktop CPU, and a new 10nm-based server CPU (code-named “Sapphire Rapids”). The company's 7nm-based CPU product timing is shifting approximately six months relative to prior expectations. The primary driver is the yield of Intel's 7nm process, which based on recent data, is now trending approximately twelve months behind the company's internal target.

I have no idea what Intel's internal target was, but it seems like Alder Lake is 2021 product. It may mean 7nm Client is late 2022 bound.

 

[Jimzz]

They still have not fully figured out their 10nm so not sure why anyone would think 7nm would come out with flying colors.

I am betting they will have to cut back on density of 7nm like they did the 10nm to get anything out the door in any salable numbers.

 

[clemsyn]

Bad news for Intel. Good news for AMD

 

[Markfw]

Who would make up the difference for desktop volume? AMD still has nowhere near enough capacity to make a bigger impact, unless they develop competing products for older nodes.

How do we KNOW that AMD can't get out considerably greater volume ? Not saying they could make up all 80-90% of all CPU's, but even if they could provide 40% and then later 50%, That could change the market share.

 

[LightningZ71]

I believe that I’ve read in multiple locations that TSMC is still very capacity constrained on their leading edge node products. For AMD to get more capacity, it will take a bidding war with Apple and Nvidia for it among others.

 

[turtile]

I believe that I’ve read in multiple locations that TSMC is still very capacity constrained on their leading edge node products. For AMD to get more capacity, it will take a bidding war with Apple and Nvidia for it among others.

AMD doesn't use the leading edge at first because of this. GPUs have been first and then CPUs. TSMC will be shipping 5nm this year while AMD will have an improved version in 2022.

 

[NostaSeronx]

Couple of questions to answer though;
Is it with the qualification fleet(NXE:3300/NXE:3350/NXE:3400B @ Oregon) or a production fleet(NXE:3400C)?
Is the yield numbers with pellicle or without pellicle?

If it is qualification and without pellicle those expectations are a little early for doom and gloom.

TSMC 5nm/Samsung 3nm don't even have that as doom and gloom. But, we've seen everyone with sense avoid 7nm+/7LPP onwards though for 8LPP/N7P.

 

[maddie]

What happens to their supercomputer contract?

 

[Exist50]

Couple of questions to answer though;
Is it with the qualification fleet(NXE:3300/NXE:3350/NXE:3400B @ Oregon) or a production fleet(NXE:3400C)?
Is the yield numbers with pellicle or without pellicle?

If it is qualification and without pellicle those expectations are a little early for doom and gloom.

TSMC 5nm/Samsung 3nm don't even have that as doom and gloom. But, we've seen everyone with sense avoid 7nm+/7LPP onwards though for 8LPP/N7P.

Oh be quiet for once. It didn't even take a week for you to be proven wrong beyond a shadow of a doubt. This, of course, isn't news to anyone experienced on this forum, but at least have the decency to spare us the rambling for a few weeks.

 

[zacharychieply]

already posted this on Reddit but here is my opinion 'The internal, in-depth, story of Intel's mistake was that the designed their node for sustained high frequency performance where as TSMC designed their node to be you know be 'manufacture-able" '

 

[JasonLD]

What happens to their supercomputer contract?

Sapphire Rapid is probably going to be ready and looks like Ponte Vecchio is going to fabbed on either TSMC or Samsung.

 

[Hitman928]

Couple of questions to answer though;
Is it with the qualification fleet(NXE:3300/NXE:3350/NXE:3400B @ Oregon) or a production fleet(NXE:3400C)?
Is the yield numbers with pellicle or without pellicle?

If it is qualification and without pellicle those expectations are a little early for doom and gloom.

TSMC 5nm/Samsung 3nm don't even have that as doom and gloom. But, we've seen everyone with sense avoid 7nm+/7LPP onwards though for 8LPP/N7P.

If Intel still hasn't figured out how to make an EUV pellicle, they are in even worse shape than I thought.

 

[IEC]

I have no idea what Intel's internal target was, but it seems like Alder Lake is 2021 product. It may mean 7nm Client is late 2022 bound.

"Intel now plans to make its first 7-nanometer chip shipments in late 2022 or early 2023, CEO Bob Swan said on a conference call with analysts on Thursday."
Source: CNBC

 

[NostaSeronx]

It didn't even take a week for you to be proven wrong beyond a shadow of a doubt.

Like they aren't producing 7nm at all.
With internal pellicle => constant bad yields
Without internal pellicle => only for client heavy swings of good and bad yields.

Server products need a working pellicle, client products can do without but it gets into total yields/costs. (Client EOL extended support requires pellicle at Intel)
2nd generation internal pellicle or 3rd+ generation foreign pellicle. The foreign pellicle is going to be used for TSMC's 5nm HVM instead of their internal one. The only good 1st generation pellicle is Samsung's one.

Mass production is with NXE:3400C tools w/ 2nd gen pellicles at Intel unless the foreign pellicles are really good as believed. Of which the external pellicles only go in HVM service in Q1-Q2 2021. (Edit: https://jp.mitsuichemicals.com/en/release/2019/2019_0531_01.htm )

 

[Hitman928]

"Intel now plans to make its first 7-nanometer chip shipments in late 2022 or early 2023, CEO Bob Swan said on a conference call with analysts on Thursday."
Source: CNBC

Man, that is going to be tough sledding for Intel. AMD and ARM will most likely be on TSMC's 3 nm by the time Intel gets 7 nm out the door in volume.

 

[JasonLD]

"Intel now plans to make its first 7-nanometer chip shipments in late 2022 or early 2023, CEO Bob Swan said on a conference call with analysts on Thursday."
Source: CNBC

Ah, I see, thanks. Since it looks like Intel is going to use external fab for Ponte Vecchio, not sure if that is going to be CPU or GPU. If they can't get 7nm on sufficient volume by then, Intel should look for TSMC/Samsung.

 

[Hitman928]

Intel said on Thursday that its gross margin fell to 53.3%, the lowest in 11 years.

Looks like Intel ran out of accounting tricks to play to keep their GM up. If this trend holds up, AMD's GM will be within 10 pp of Intel's at the end of the year. That's not great when Intel has to pay for all their fab R&D and maintenance themselves.

 

[Hitman928]

Ah, I see, thanks. Since it looks like Intel is going to use external fab for Ponte Vecchio, not sure if that is going to be CPU or GPU. If they can't get 7nm on sufficient volume by then, Intel should look for TSMC/Samsung.

The last I heard (may be dated at this point) was that Intel was reluctantly willing to fab GPUs and other things at 3rd party fabs, but that there was no way Intel would allow their CPUs, especially high performance lines, to be fabbed anywhere but Intel. It does make some financial sense as you have huge investments and infrastructure all built around your fabs that gets wasted if you start producing even your CPUs elsewhere, but there's probably a more ideal strategy of mixed fabrication plans. From what I heard, it is largely ego pushing this Intel fab or bust strategy for CPU fabrication.